Safaricom now banks on data

Safaricom, in the wake of growing competition in mobile telephony, is banking on its data service as part of its growth strategy ahead of the fibre optic cable landing in June.

The mobile phone service provider now hopes to double its revenue from data, mostly e-mail and internet connectivity, in the next two years as the need for cheaper and convenient corporate and personal communication rises.

The new strategy is also supported by the listed firm’s financial statements. In its half year results ending September 30, 2008, the company noted that its core revenue stream of voice grew by 17.1 per cent to Sh29.7 billion, up from Sh25.3 billion for the same period in 2007.

In contrast, SMS and data grew by 76.1 per cent to Sh3.7 billion, up from Sh2.1 billion in 2007 accounting for 10.8 per cent of the total operator’s revenues.

“Our strategy is to offer all data needs and push data revenue up to 20 per cent in the next two years,” said Safaricom chief executive, Michael Joseph, during a video conference on Monday.

Though the data figures are negligible compared to voice revenues, the sharp increase of data revenue signals customer demand for instant information and the need for value added services if mobile operators are to remain competitive.

Since Safaricom launched its third generation (3G) network in April last year, Mr Joseph disclosed that his company had invested over $50 million (about Sh4 billion at current exchange rates) in upgrading its infrastructure for the service.

Among them was the acquisition of a 51 per cent stake in One Communication Limited, a WiMax (wireless network) company last year. It also acquired a 20 per cent stake in the TEAMS undersea fibre optic cable.

“We are already in Nairobi and Mombasa and are currently rolling out 3G in western Kenya,” he said. “However, not all areas have good bandwidth because it is currently limited.”

Set for upgrade

On Monday, the company kicked off a campaign to popularise its business products after introducing a new range. Mr Joseph also announced that its cash transfer service, M-Pesa, was set for an upgrade to allow it become a fully functional banking product that will also allow the payment of goods and services.

“We have already submitted our application [to the Central Bank of Kenya] and hope to begin soon,” he said. The announcement comes barely a week after its competitor, Zain Kenya, received the nod from the CBK to launch its mobile solution service.